Why The Athletic Wants to Pillage Newspapers

By the time you finish reading this article, the upstart sports news outlet called The Athletic probably will have hired another well-known sportswriter from your local newspaper. In a couple of years, once The Athletic has completed its breakneck expansion, perhaps that newspaper’s sports section will no longer exist.

“We will wait every local paper out and let them continuously bleed until we are the last ones standing,” Alex Mather, a co-founder of The Athletic, said in an interview in San Francisco. “We will suck them dry of their best talent at every moment. We will make business extremely difficult for them.”

The Athletic is a subscription sports website and app featuring pages of local articles that roughly replicate newspaper sports sections. It launched in Chicago in January 2016 and has expanded to full coverage in seven cities, hockey coverage in eight more, national college basketball and football sites, and plans for more. Subscribers get access to all of it.

The Athletic is already one of the biggest sports media companies in the country, with about 65 editorial employees. “Our ambition is to be the local sports page for every city in the country,” Mather said.

To understand why The Athletic is so brazen about its vulture strategy, one must appreciate the state of play at local and regional newspapers throughout the country. Under dire financial duress, many have put extraordinary demands on beat writers to produce heavy volumes of content, often without wage increases. The reporters are sometimes the most knowledgeable sources of information on the teams they cover, but they are afforded little opportunity to step back and write impactful articles.

These reporters are skilled experts feeling the strains of a crippled industry, and many are looking for a way out. Mather knows it.

Mather, 37, founded The Athletic with Adam Hansmann, 29. They worked together at Strava, an app and website for weekend warriors and elite competitors that calls itself the social network for athletes.

That experience, along with their frustration at the difficulty of finding high-quality sportswriting that wasn’t bogged down by pop-up ads, informed their big bet. They believe there are hundreds of thousands, and eventually millions, of enthusiastic sports fans willing to pay $60 annually — less with frequently offered discounts — for good reporting and writing, a clean app and no ads.

They have raised almost $8 million in venture capital funding and have recurring subscription revenue, ensuring the site won’t shutter soon. But the question everybody in sports media is asking is, What happens in three, five, seven years? Will The Athletic’s business model allow it to survive that long?

Newspapers are a classic example of a bundle. Subscribers might read just one section, but their subscription gets them the entire paper. Mather and Hansmann believe that sports is an undervalued part of that bundle, and that there are tens of thousands of sports fans in each city who don’t care about the other sections, and would rather jettison their subscription and pay for The Athletic instead.

“I think the sports page has carried local papers for a while, and they don’t treat it well,” Mather said.

After waiting nine months to debut its second local site, Toronto, and another five months for its third, Cleveland, the company planned to grow the number of local sites slowly, before tackling national ones. But that timeline was drastically altered after layoffs at ESPN, Sports Illustrated, Yahoo Sports, Fox Sports, Bleacher Report, Vice Sports and Vocativ this spring and summer put dozens of talented, well-connected journalists on the market.

The Athletic raised $5.6 million in venture capital financing in July to take advantage of the moment, adding to the $2.3 million seed round it raised in January.

“It was really hard to see everything that was happening in terms of the layoffs,” said Deepen Parikh, an executive at Courtside Ventures, one of The Athletic’s largest investors, “and knowing we really, genuinely had an opportunity to capitalize on it and not take it.”

The Athletic did not need to raise any financing, its executives said. Only one of the local sites, Toronto, breaks even — Chicago and the Bay Area and “a few smaller markets” are on track to do so by the end of the year, executives said — but most subscribers pay upfront for an annual subscription, so The Athletic had cash in hand to continue operations.

The company has wasted no time spending the new money. It started sites in Detroit, Philadelphia, the Bay Area and Minnesota, brought on the former Fox Sports writer Stewart Mandel to lead a national college football site and hired the former Sports Illustrated writer Seth Davis to head up another for national college basketball.

Paul Fichtenbaum, a former top Sports Illustrated editor who had been working for The Athletic as a consultant, was hired to oversee the national sites and start a longform vertical, called Ink. “Building a company is exciting,” he said, but the “bigger opportunity to change an industry is really something that we all aspire to.”

Now the plan is to raise even more money soon, and to gain a foothold in every American and Canadian professional sports market within two years. “If there is a hockey, basketball, baseball or football team” in a city, Hansmann said, “that’s the starting point.”

It is that kind of ambition, in an industry that has sustained a decade of retrenchment, that has most of the sports media industry rooting for The Athletic’s success. Every writer knows he or she could be the next victim of a naïve pivot to video.

But Mather and Hansmann have displayed sharp elbows, and not everybody is happy with them. Newspaper sports editors have been left smarting after losing reporters to The Athletic — four writers for The Athletic Bay Area worked at the Bay Area Newspaper Group a few months ago. And then there is Dejan Kovacevic, a longtime Pittsburgh sportswriter who started DK Pittsburgh Sports, a subscription-based local sports site that in some ways is a model for The Athletic, three years ago.

In an email, Kovacevic said that Mather and Hansmann had approached him to be an adviser but that they couldn’t agree on compensation. The Athletic, he said, promised not to start a Pittsburgh site. Instead, The Athletic Pittsburgh hired a second writer away from DK Pittsburgh Sports recently. Kovacevic also said that Mather and Hansmann were unhappy when he sold a copy of his publishing platform to Greg Bedard, who launched a subscription sports site in Boston this summer, because they said it raised their cost of doing business.

Mather said that when The Athletic’s executives spoke with Kovacevic, they had no intention of expanding into Pittsburgh in the near term, and that he and Hansmann “only make ‘promises’ to our customers, employees, investors and partners.”

“We are doing great work,” Mather said. “We treat our writers really well, we pay them well, and we are doing amazing journalism. If someone has a problem with that, that’s on them.”

Mather and Hansmann also don’t hew to traditional — they would say antiquated — norms about the separation of business and advertising efforts, and are already cozier with the teams they cover than many outlets. They have an agreement with the Toronto Argonauts of the Canadian Football League, for instance, whereby Argonauts season-ticket holders can receive a trial subscription to The Athletic, paid for by the Argonauts.

Hansmann said The Athletic pulled no punches in its reporting on the Argonauts, while Mather suggested The Athletic could partner with teams on insider video or events in which subscribers go to the stadium early for exclusive access. Fichtenbaum said his understanding was that the Argonauts partnership was a one-off.

Similarly, many of The Athletic’s representatives sang the virtues of its digital presentation, which shuns banner ads. But Parikh, the investor, said, “Advertising has a very real opportunity down the road with The Athletic,” before adding that it would have to be “customer centric.”

Mather and Hansmann declined to disclose subscription numbers, but they have said Toronto, their most successful local site, has more than 15,000 subscribers. The national sites figure to boost local subscription numbers.

As The Athletic’s costs rise — it will soon need a bigger office, and the company is beginning to hire nonrevenue-generating support staff like accountants and human resources personnel — the company will seemingly need to attract casual sports fans. But Mather and Hansmann are not convinced.

“In a city like Chicago, there are 100,000 die-hard fans,” Mather said. “That is a very lucrative subscription business. There are over 100,000 die-hard fans of Chicago teams outside of Chicago,” he added, and he says they aren’t served well. “Bleacher Report is empty calories. SB Nation is empty calories. The newspapers are doing nothing.”

More journalists and investors will pay attention if The Athletic can get to the point that it can rely only on its own revenue, rather than having to turn to venture capital. Successful online media subscription products usually either cost hundreds or thousands of dollars annually and appeal to information-starved professionals — like The Information and Politico Pro — or have relatively inexpensive subscriptions that support relatively few writers — like DK Pittsburgh Sports and Stratechery.

While The Athletic aspires to be the Spotify or Netflix of sports media, the only media companies that have achieved scale with a relatively low price point (and the help of ads) are the very same newspapers The Athletic is intent on destroying.

Bleacher Report was the big sports media winner of the era when scale and online advertising revenue seemed like the future of media. It was rarely profitable and raised $40 million in venture capital funding before being bought by Turner in 2012 for about $175 million. According to skeptical media executives and investors interviewed for this article, something similar is most likely the best-case scenario for The Athletic.

Mather and Hansmann insist that they, and their investors, are in it for the long haul, and that the time is finally right for a subscription media product to go big. “The advertising business model does not align with quality,” Mather said. “It’s hot takes instead of objective analysis, it’s short-term instead of long-term, it’s serving sponsors instead of users, it’s thinking big instead of great.”

“It really comes down to the business model,” he added. “That is our core belief.”

A version of this article appears in print on , on Page B7 of the New York edition with the headline: They’re Out to Kill Every Paper’s Sports Section. Order Reprints | Today’s Paper | Subscribe